A great new year for conservationists

The European Commission handed environmentalists an early Christmas present in late November when it rejected all but one of a first batch of ten national carbon allocation plans for the second phase of the EU emissions trading scheme.

Campaigners had warned the Commission for months to be firm with any governments that tried to give over-generous emissions rights to their industries. To the surprise of many, the Commission took up the challenge.

In carbon allocation guidelines circulated at the start of 2006, it had told member states that to meet their Kyoto Protocol targets they would have to trim carbon allocations by 6% compared with the number of permits granted to firms for 2005-07.

But in November it told governments that it would veto their plans if they refused to cut their planned allocations even further - by an average of 7%. Some countries were told to slash permit hand-outs by up to a quarter. The indications are that the remaining 17 national allocation plans will get similar treatment.

The Commission’s steadfastness was a rare positive note for environmental campaigners, who constantly complain that firms are being allowed to sidestep the big emission cuts needed to comply with Kyoto. "Governments continue abusing the system to protect their industries from change rather than to lower greenhouse gas emissions," says Jan Kowalzig of Friends of the Earth.

But environmentalists say the overall country-level carbon cap is only one aspect of the scheme that needs to change in the 2008-12 second phase. "The rules for how emission allowances are given to individual plants are equally important," according to Delia Villagrassa of WWF, a conservation group. "The plans must reflect the principle that those who pollute more have to pay more, but at the moment this is not the case."

Most importantly, governments need to auction more allowances instead of distributing them without charge. "It is fundamentally wrong to hand out the permits for free," says Kowalzig. "This leads to huge windfall profits for the power industry, by including the price of carbon into energy bills for consumers." Only ten of the 27 member states have plans to auction any permits and only the UK is planning to even approach the 10% maximum limit agreed by EU member states on the number that can be auctioned.

Campaigners also want governments to close off what they say is another major loophole in the law - the ability for firms to buy carbon credits generated outside Europe by emissions reduction schemes carried out under the Kyoto Protocol’s flexible mechanisms.

Conservation groups accept that some external permits must be available. But they warn that if a strict limit is not put on the numbers flowing into the market, European industry will have no incentive to make the big internal structural changes that will be needed in order to reach the deeper greenhouse gas cuts envisaged by the EU after 2012.

The European Commission handed environmentalists an early Christmas present in late November when it rejected all but one of a first batch of ten national carbon allocation plans for the second phase of the EU emissions trading scheme.